Tax season is now in full swing. Most are placing their focus on gathering receipts, learning how to complete their own taxes, or are researching bookkeepers to help them with the endeavor. At this point, more and more taxpayers are getting antsy and nervous about finding themselves on the bad side of the IRS; however, there is another group of people that you should be concerned over – identity thieves.
In 2016, identity theft caused more than $21 billion in fraudulent tax refunds. Will your identity and your refund be next? Continue reading to learn how to protect yourself from tax identity theft and the financial-based ramifications it causes.
What is Tax Season Identity Theft?
Tax identity theft occurs when an individual illegally uses your Social Security number in order to file a tax return.
In most instances, this is done to obtain a refund in a fraudulent manner.
In other instances, it is done in order for the individual engaging in the criminal activity to obtain employment.
Once used to get a job, the employer of the criminal will then report all earnings to the Internal Revenue Service using that Social Security number. Then, when you file, the IRS may audit you as the numbers do not match – in terms of earnings.
Individuals that fall victim to identity theft throughout the tax season will be unable to file their own returns, claim their tax refund, and may be subjected to a wide array of other issues.
These include the criminal obtaining illegal loans, signing up for credit cards, and opening similar financial accounts under your Social Security number.
As a result of this type of theft, you may find yourself suffering from serious financial issues and your credit may be quickly damaged.
You will be held responsible for the illegal activity and will have to work very hard to clear your name.
Are You at Risk?
Tax identity theft usually occurs because your personal information has either been made public or it has reached the wrong person. In many cases, it could be a direct result of security breaches, computer-based hacks, keylogger programs, or your mail being stolen. This type of theft occurs during tax season.
Criminals work hard to file returns before the real person files their return.
While the Internal Revenue Service is taking several steps to help ensure that this does not happen, it is still occurring.
This means you must do everything you can to protect your sensitive information so that it does not end up in the wrong hands.
How Do I Protect Myself from Identity Theft?
There are several steps that you may take to avoid becoming the next victim of tax season identity theft or standard identity theft. Even if you have discovered that you have already been victimized, the following steps will aid in preventing a future occurrence:
- First, you should opt to have all of your bills and statements delivered electronically. When doing so, make certain that you use a highly secure password that consists of numbers, letters, and special symbols so that would-be ID thieves are unable to figure out your password and gain illegal access to the information contained in your email.
- If you use a standard mailbox at your home, you should make certain that you purchase one that includes a lock.
- When using your computer, you should make certain that you use an antivirus program that will keep hackers out and away from your personal information.
- Make certain that your home network is protected by a secure password. Avoid allowing others to use your network for internet access.
- Make certain that all computers on your home network are protected by a firewall.
- If you receive emails requesting financial information, personal information, or any other types of information that pertains to you – directly – you should not click on any links or provide any information.
- All sensitive documents that you have should be placed in a deposit box for safety purposes. If you are unable to obtain this type of box, you should – at the minimum – place those documents in locked safe within your home and the key should be hidden.
- You should never freely give out your Social Security number. In fact, you should ensure that you rarely provide this information.
- Make sure you check your credit report on a regular basis to ensure that there is no suspicious activity.
- Before throwing out mail with your information on it, be sure to shred it so that thieves are unable to get information off of it that may jeopardize your identity and financial livelihood.
What Do I Do if I Find I am a Victim of Identity Theft This Tax Season?
If you have recently discovered that you have become a victim to identity theft this tax season, you will need to start by reporting to the Internal Revenue Service. You will also need to report to the Trade Commission. Simply perform the following steps to start rebuilding your finances and your personal livelihood:
- The Internal Revenue Service will likely send you a Form called “5071C”. You must complete this and return it to the agency.
- You may use the Form called “14039” to make the IRS aware of the issue at hand.
- You may request that the IRS provides you with a protection pin that is used to ensure you are who you are when you file taxes and obtain your future tax returns.
- If you file taxes with your state, you should contact the tax agency that governs it to make them aware of the issue.
- Request that all credit reporting bureaus place a fraud alert on your record.
- If necessary, apply for a new Social Security number.
- If any requests or correspondences are made from the Social Security office or the Federal Trade Commission, follow up quickly and do as requested.
For more information on how to protect your assets, you may contact us today by calling